The Twin Cities housing market is showing an interesting split: multifamily construction is gaining momentum, while single-family construction continues to face affordability and financing challenges.
According to the latest Keystone Report, Twin Cities communities permitted 1,107 new housing units in September, approximately 20% more than the same period last year. The biggest change was in multifamily construction, where permitted units increased 81% year over year. Single-family permits, meanwhile, declined 8%.
For multifamily owners and investors, the numbers are worth watching.
Multifamily Construction Is Picking Up
Apartment construction has faced significant challenges over the past couple of years. Higher interest rates, elevated construction costs and difficulty getting projects to pencil have slowed new development.
But 2026 has shown signs of improvement.
Through August, Twin Cities communities had permitted 2,278 multifamily units, up 69% from the same period in 2025. September added another strong month of multifamily activity.
That doesn't necessarily mean the market is being flooded with new apartments. Developers are still dealing with high construction costs and challenging financing conditions, while the broader Twin Cities housing market continues to face a shortage of housing.
What Does This Mean for Existing Apartment Owners?
For owners of existing multifamily properties, increased construction is something to monitor — but not necessarily something to fear.
New apartments can eventually create additional competition for tenants, particularly when a large number of units are delivered in the same submarket.
However, location, condition, rents and amenities matter.
An older property with below-market rents may still have significant upside if an owner can improve the property, renovate units or better position it in the market. Properties in strong locations with competitive rents can continue to perform well even when new construction enters the market.
The bigger question for owners is:
How competitive is your property today — and how will it compare with the properties being delivered over the next three to five years?
More Development Can Also Be a Positive Signal
Increasing multifamily construction can also be viewed as a sign that developers and lenders are becoming more comfortable with the long-term fundamentals of the apartment market.
After a period of limited new supply, additional development may help address the region's housing needs while providing another indication that demand for rental housing remains strong.
That doesn't mean every new project will succeed. Financing remains challenging, particularly for market-rate development.
But continued demand for apartments, combined with the region's long-term housing needs, supports the broader case for multifamily real estate in the Twin Cities.
What Should Multifamily Owners Be Watching?
For apartment owners considering whether to sell, refinance or continue holding, I would focus on four things:
1. New supply in your submarket
How many units are actually under construction or planned near your property?
2. Your property's competitive position
Are your rents, condition, amenities and operating expenses competitive with newer properties?
3. Future capital needs
Will your property require significant investment over the next three to five years to remain competitive?
4. Current market value
How does today's potential sale value compare with the income you could generate by continuing to hold the property?
The headline number on new construction is important, but the local supply picture is often much more important than the metro-wide number.
For multifamily owners, understanding that distinction can help determine whether now is the right time to hold, improve, refinance or consider a sale.